12/14/2022
It's safe to say that the U.S. is in a good time for you to buy that new or used house that will become your home. Although prices have started to drop, that doesn't mean you're going to get the best mortgage loan available.
If you understand that the easy way out can be costly, we explain the most relevant factors when comparing mortgages.
Importance of comparing mortgage loans
The problem is not the lack of offers to obtain a home, but finding the mortgage that best suits your financial situation.
Even if you consider the paperwork a daunting task, you have many resources at your disposal to do a detailed research to make a smart decision.
- Interest: From 4.75% to 5.75%
- Max term: 30 años
- Interest: Consult
- Max term: 30 años
- Interest: First years fixed-rate and the rest adjustable: SOFR + margin
- Max term: 30 años
- Interest: SOFR + margin
- Max term: 30 años
- Interest: From 5.125%
- Max term: 30 años
Remember, this is a years-long commitment, so it's well worth saving a few bucks in the process. This reality makes it much more sensible to do a thorough comparison to get the most attractive deal.
Tips for comparing mortgages in the United States
According to a US News survey, people who want to buy a home are aware of how to go about the process.
The data says that 30% of respondents researched more than 5 hours, just over half (54%) obtained at least 2 quotes, 70% are preparing for this financial commitment, 65% compared closing costs and APRS, and 37% compared all available mortgage types.
Although this is a representative sample, it reveals trends among those looking to purchase a home or apartment. This brings us to our top tips:
Consider the different types of mortgages
In the so-called land of opportunities, you have 2 options to obtain a mortgage loan: conventional and governmental. The differences between the two are in the requirements demanded by the entities that offer these products.
In the government branch, you have several programs:
- USDA loans. They belong to the Department of Agriculture for the acquisition in certain rural areas. They require a minimum down payment of 3.5% and an annuity of 0.5% of the outstanding balance.
- VA loans. Sponsored by the Department of Veterans Affairs, these are for active and retired military personnel and their surviving spouses. They have a 0% down payment and rates vary depending on the advance you make.
- FHA Program. Known as the Federal Housing Administration, it functions as a guaranty for buyers rather than a mortgage. It has more flexible credit score requirements and a down payment starting at 3.5%. However, you must pay a down payment of 1.75% of the mortgage and at least 11 years of insurance.
Locate mortgages with customized rates
Some search engines provide the opportunity to find more targeted products. You simply enter your ZIP code, choose the type of financing you want and answer a few questions about your financial situation.
These personalized quotes do not affect your credit score, you can get new ones by updating your data and we suggest you try several scenarios to better compare the options.
Research the most suitable options
In the "shop around" of mortgages, a good comparison cannot be based on just 1 or 2 lenders. It is essential that you analyze a reasonable number of offers, up to a maximum of 10.
You should include banks, credit unions, mortgage private companies, online companies and mutual institutions for this purpose. While gathering accurate information, you can rely on Busconomico's comparator for the most popular ones.
Evaluate options from lesser-known institutions
While conventional mortgages have fewer limitations than government mortgages, there are also many lenders that offer them. In addition to alternatives from online companies and well-known banks, you can include other options with a lower profile.
May interest you: Fifth Third Bank mortgage loans reviews
If you search for "community bank mortgage," "credit union mortgage" or "S&L mortgage," you might be surprised to find better terms for ARMs or fixed-rate mortgages for different kinds of budgets.
Use the CFPB's loan estimate.
Once you have a list of candidate mortgages, you should ask each lender for a mortgage loan estimate. This is a standard document prepared by the Consumer Financial Protection Bureau.
This process does not take points off your score as long as it is within 45 days and is for the same product.
You must provide personal information for them to review your history, we recommend you request them all on the same day and review in detail the first page of the report, which talks about the amount of closing you need.
Español: Cómo comparar entre varios préstamos hipotecarios